Accounting reform

Your article ‘Time to acknowledge mistakes, says audit chief’ (European Voice, 6-12 March), was incorrectly described as an interview, and the impression it gives of a European Commission needing a new clarion call from Bruges, rather than from Brussels, because it is not moving at all on various accounting fronts, puts the reader on the wrong foot.

First, I did not give an interview to your reporter. He attended my speech and I had a few words with him in the margin of the event. All quotes were from my speech and the Q&A session.

Second, my presentation was about reform in accounting and accounting for reform, in both the public and private sector. It addressed the very similar controls challenges public sector authorities face in Europe, Japan, and the US, and the cross-linkages these issues have with the accountancy crises in the private sector. Also, your article risks muddling up two issues I attach a lot of importance to keeping separate: the roles of the Commission as a money manager and a regulator of the accountancy profession.

As far as the latter is concerned, my longstanding thesis has been that all actors in the (inter)national financial architecture that play a role in the reform of the accounting landscape are bound to walk around in circles in dealing with the accounting crises, unless they break the mutual silence on one’s own weaknesses.

Unless regulators, standard-setters, professional institutes of accountants, the legislator, and, most importantly, accounting firms are all willing to acknowledge they are part of the solution, but also a major part of the problem, the accountancy profession is, particularly in the international context, not going to progress fundamentally, because there is no authoritative arbitrating mechanism.

My proposed solution has been to require each of these actors to prepare a disclosure and assurance statement, with legal jeopardy, on their performance record – and manageable and non-manageable constraints – much along the lines of what the Commission has now quite effectively introduced for its own money management. So far, no one accounting actor has been willing to embrace this vulnerable concept of self-disclosure of its own volition.

I do think the Commission’s management assurance statement exercise is key to reform, as the article confirms. And I have been instrumental in contributing to it. But it would be foolish to claim personal authorship and ownership of the Commission’s reform programme, which is much bigger than financial controls, or any individual.

Your report’s close-up in portraying me as the ‘White Knight On The Shiny Horse’, risks seeing only a horse’s ass. Which I hope was not the effect of the story told, heard, and seen in Bruges.